Roots of a devolution showdown
The finance commissions have been the only instrument to mediate this conundrum with an implicit grand bargain. The poorer states have benefitted hugely from the transfer of taxable resources from the richer states. This happens because the largest weight in the horizontal devolution formula—which determines how much each state gets from income taxes, import duties and GST—is the inverse of the state's per capita income, which means the poorer a state is, the more resources it gets.
It is a testament to India's federal solidarity that this has been accepted without complaint by the richer states for the past 30 years. The unspoken obverse of the political bargain was the population component of the devolution formula would be calculated using the 1971 numbers, and seat apportionment in both houses of parliament, too, would be based on the 1971 population.
However, things are different now. The richer states have been asking: Why has there been no convergence despite such a significant resource transfer from the peninsula for over 30 years? When does solidarity in anticipation of convergence turn into a permanent subsidy? Why is delimitation happening now, with a conveniently postponed census that will be used to fix relative parliamentary strength, possibly as soon as the next election? Why was the XV FC asked to use the latest census in determining its award?
Add to this the contemporary tension of an ascendant ruling party in Delhi, with its base in the poorer states, allegedly misusing its governors to subvert political decisions made by southern states, seemingly seeking to impose Hindi as a national language and aggressively (if unsuccessfully) promoting regional leaders to challenge the dominant political consensus with its own brand of nationalist Hindutva politics, and the stage is set for an apocalyptic showdown.
The XVI FC cannot, therefore, pretend that it is business as usual. This is not why they were given a broad mandate to focus on devolution issues. Given that it is appointed by the Centre without consulting the states, given the consistent anti-peninsular bias in its composition, and given that the Government of India can adopt its recommendations without the concurrence of the states, it is (rightly or wrongly) also significantly exposed to the charge of partisan conduct. It is, therefore, very worrying when the commission's chairman is quoted as ruling out certain options (such as a sharp increase in devolution to states) in the public domain months before the award is placed before parliament.
There are many options available to the XVI FC if it has the independence and technical competence to consider them. And I sincerely hope that this is where their focus is, insofar as their abilities allow. However, pusillanimity and businessas-usual thinking, along with throwaway comments to the media (which does not befit a non-partisan constitutional body), are unhelpful, irresponsible, and damaging at this delicate juncture when intergovernmental fiscal relations are already under strain from larger pressures caused by economic and political divergence.
Rathin Roy is a distinguished Professor at Kautilya School of Public Policy, Hyderabad; Visiting Senior Fellow, Overseas Development Institute, London
(Views are personal)
(rathin100@gmail.com)
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